The Chief Executive Officer of
Konga.com, Sim Shagaya, in this interview with Bankole Orimisan, spoke about the online retail market in Nigeria, the challenges and how MainOne’s broadband service has enhanced the operations of
Konga.com
1. You have become a force to contend with on the online market platform. Who really is Sim Shagaya?
I was born and bred in Lagos, Nigeria. My father is from Plateau, and my mother is from Delta. I think what drives me and a lot of my colleagues here to do some of the things we do is a very deep abiding love for our country and for the promise of this great land but even more than that, I think technology has a great role to play in the way that we will conduct business, in the way we trade with each other, do commerce, the way our country is governed and society is organised. We love technology and the application of technology and that’s what drives a lot of the things that we do. It’s what has brought this great group of people together to build Konga, which is a turning out to be an astounding technology company.
2. You seem to have your fingers in many juicy pies: you own Dealdey,
Konga.com and eMotion Advertising. What’s the story behind your many business interests?
I don’t know if I would call them juicy pies as they are still young businesses that require a lot of work but I have a stake in those businesses along with other Nigerians and a few international institutional investors.
eMotion is the oldest of those businesses. I started eMotion in 2006 along with a colleague, and with two digital billboards in Abuja. These days you see digital billboards everywhere but then we were the pioneers. I have been given a lot of opportunities and Nigeria has given me a lot. I had the opportunity when I finished school to stay abroad but few weeks after, I knew I had to come back home. I knew that there were opportunities here. This was in early 2000 and democracy still looked shaky but I knew that the future was bright for Nigeria and so I, like a few others at the time, bet on the country. All our savings at that time were put into this billboard business called eMotion and we started off with two billboards in Abuja and it has grown tremendously. It’s one of the largest out of home advertising companies in Nigeria now.
eMotion later gave birth to Dealdey which became one of the first e-commerce companies in Nigeria with considerable size. Dealdey is a special e-commerce company where you come looking for offers and deals; what we have is what you get, and that experience told me that there was something deeper we could do in Nigeria, something much more profound and that’s what led us to Konga. Konga is a full-fledged retailer with hundreds of thousands of products.
We never really had these retailers in Nigeria. We had some of them like Kingsway and Leventis that were really trying to take off in the 1980s before the Structural Adjustment Programme truncated their existences. But since then, we haven’t had structured retail until the arrival of Shoprite, Game and others. I knew there was an opportunity here for structured retail but I also knew there were real constraints in doing it the old way so I reached for this new way by using e-commerce and believing that it would work better. It’s not like when you go to London where there is seemingly a Marks and Spencer at every corner; here we don’t have that core retail infrastructure.
So we have to build not just the core but the supporting logistical infrastructure and that’s why we are building Konga, we are building this massive infrastructure not only for us as a retailer but as a platform for other smaller retailers also.
3. How would you describe the present state of e-commerce in Nigeria?
It’s still early. It’s still a baby but with what I’m seeing, it’s a big baby and we are still trying to figure ourselves out. And just like a baby you stumble, you fall and bump your head sometimes, but it does look like the opportunity is quite bright. Like many things in the world nothing comes for nothing. The opportunity looks great but the challenges also look quite big.
Let me tell you about one of the challenges for e commerce; if you were in the United States and you are starting an e-commerce company, you can easily rely on the United States Postal Service or the Royal Mail in the U.K.; all you do is to operate your warehouse, your goods in your warehouse and Royal Mail will come to pick up things from your warehouse. Your focus is on intra-warehouse operations and technology.
Here in Nigeria, NIPOST and EMS have made a lot of reforms, but we still have work to do. You find that as an e-commerce company, you have to build the infrastructure outside the warehouse; the goods are not going to get themselves out from your fulfillment center to your customers’ door, so you have to build that link and that is where the biggest challenge is going to come from and that’s what Konga is tackling head on. Same goes for the internet connectivity which is strategic to our deliverables to the customer. We took our time sourcing for a service provider that will ensure that steady, consistent QoS and MainOne broadband gives us that edge.
So I think it’s still very early but we have been encouraged with the signs that we’ve seen; how quickly Nigerians have taken it up and it’s not only Nigerians in the typically assumed areas like the Islands of Lagos but everywhere. We are seeing orders coming from everywhere. A microwave being shipped to Aba, Shoes to Gusau, Phones to Ibadan. Its everything to everywhere. So I think it’s early but the future is bright and there is a lot of work to do.
4. As a current customer of MainOne, how would you describe your relationship with them so far?
I think it’s been great; it has been very cordial and professional. They are a very responsive company, which was something we found lacking in other companies. We are a very customer-centric company so we show our respect when other people show similar customer-centricity. Even the CEO gets involved in our service issues few times that they exist; she took a sort of personal interest in how things are going, so I think they are very professional. It’s being great and like I said, they still have a lot more work to do. Some of this work, they shouldn’t be the ones doing it but they just have to do it to really get the cost even lower and have more Nigerians access the internet service.
5. In terms of service/product, what service does MainOne provide to Konga as the core ISP?
MainOne provides broadband connectivity to our head office and distribution centres.
6. How has your internet connectivity been since joining the MainOne network?
The network is of the highest quality from experience till date. The uptime and the speed of connection is impressive.
7. Talking about service quality, how has MainOne’s connection impacted on the bottom-line of Konga?
We are an internet-based business. So it is important that we have a reliable connection with integrity and speed for us to serve our customers. If we don’t have that, then we cannot serve our customers. And our business and operations will deteriorate. So reliable connectivity is at the core of our business. It is like asking how important diesel is to a truck driver. It is important because without it, the truck cannot move. So the MainOne network has positively impacted on our business.
8. What challenges do you face in your business?
On some level we know what the challenges are but I’d tell you about the two that keep me up at night the most. The first and the most fundamental challenge we have is the availability of quality human resource. That is because of the failure of 20-30 years of the poor educational system at the tertiary level especially, so because of that, we find it hard to find people with the sort of analytical thinking that is required for the kind of thing we do. It’s not because Nigerians are not energetic; we think we are very energetic, very intelligent people but the educational system has not done very well for us. This is one of the biggest challenges.
Don’t forget that as a retailer we are subjected to competition from other retailers from other parts of the world that are coming to Nigeria where they have a longer legacy of retail and a stronger technical and educational base. This is the area where young Nigerians and Nigerian businesses are going to struggle the most. It’s not just in grabbing the opportunities or even the infrastructural deficit of Nigeria, it’s how to compete with players from other parts of the world where the educational system has worked for much longer and the technical experience is there. It means that the average Nigerian entrepreneur or the average Nigerian young business has to run at 150 percent basically.
That’s one big problem, and the other problem is the one I talked about before, which is logistics. We have to build out logistics. The long term vision of Konga is that in every state capital in Nigeria, we will have a physical presence there that pushes inventory out and in; that gets your goods to pass through that centre and goes to your house. If you need to return something because you’re not happy with it or that the device, by chance is faulty, you can take it back there. These are not internet web pages we are talking about. This is serious infrastructure. These are the two things that keep me up at night. But we are confident we can tackle them. We know that the opportunity in Nigeria is large enough or deserving enough for the effort we need to put in this.
9. Should banks and other financial institutions play any role in e-commerce?
Huge, absolutely very big and I think they are starting to wake up to it. They have several roles to play on many levels. The first is with enabling the payments. I’d give you a small example. Right now if you come to Konga and you choose an item, there are many ways to pay on Konga; you can pay with your card, pay cash on delivery or you can do a bank transfer or deposit. If you do a bank transfer or a deposit right now on Konga, we still have to go and check with the bank to see that the deposit has come in and that’s a very tedious process, which is not efficient.
But if you go to some other markets like South Africa for example; if you made that deposit in a bank, the bank systems immediately talks to Konga system and there is no human intervention in between. It’s frictionless. It happens much quicker. That’s one area. The other area has been a blessing to us in a way. I’d explain what I mean; it is the unavailability of consumer credit. Everything you see in Nigeria, it’s amazing actually; everything you see in Nigeria whether it’s a house or a car or a Samsung Galaxy phone is paid for in cash and that’s an amazing thing so it helped Nigeria get through this credit bubble that the world just went through for the past ten years because the average Nigerian doesn’t owe anybody anything, but that’s not sustainable.
As we go forward, a bit of consumer credit is desirable and the banks now need to start waking up to the fact that retail banking is about enabling people’s dreams by providing them with credit facilities for them to buy that new microwave or that new fridge or that new television. A couple of the banks have actually approached us about this already and we are working with them to find out how you can do it so that someday within the next 12 months you can come to Konga, buy a large appliance like a fridge, a deep freezer and then as you check out, you fill out a form for an application for credit which we will forward to the bank.
Hopefully, if that credit is approved within 24hours or 48hours then the bank pays Konga and we deliver your goods to you and you can then pay via an automatic debit to the bank every month. Those are the two ways but there are other many ways. The banks are just one component of commerce and so far the entire system of commerce in Nigeria has been bank heavy but now we are seeing that there are other critical components to it, for example retail and logistics, and we must work closely together.
